High-level Expert group recommends a mandatory separation of proprietary trading
The European Commission received the recommendations from the High-level Expert group on reforming the structure of the EU banking sector. The group recommends among other things a mandatory separation of proprietary trading and other high-risk trading activities, the possible additional separation of activities conditional on the recovery and resolution plan, and possible amendments to the use of bail-in instruments as a resolution tool.
High-level Expert group on reforming the structure of the EU banking sector presented its report to the European Commission which includes some actions to develop such as mandatory separation of proprietary trading and other high-risk trading activities, possible additional separation of activities conditional on the recovery and resolution plan, possible amendments to the use of bail-in instruments as a resolution tool, a review of capital requirements on trading assets and real estate related loans, and a strengthening of the governance and control of banks. In July 2011, the European Commission presented a proposal to strength the resilience of the EU banking sector.
According to the Governor Erkki Liikanen, chair of the group, the Group's recommendations would if implemented provide for a safer, more stable and efficient banking system serving the needs of citizens, the EU economy and the internal market. Internal Market and Services Commissioner Michel Barnier, announced that the Commission will now consider the next steps. He also highlighted that the Commission needs to look at these questions also in light of the financial reforms that it has already put on the table of the European Parliament and the Council.
Members of the group were chosen on the basis of their technical expertise and professional background, and were appointed in a personal capacity. Their mandate was to determine whether, in addition to ongoing regulatory reforms, structural reforms of EU banks would strengthen financial stability and improve efficiency and consumer protection, and if that is the case to make recommendations as appropriate.